Features of Debentures Quiz
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Questions and Answers

What is the effective return earned by a bond called?

  • Interest rate
  • Face value
  • Bond yield (correct)
  • Coupon payment
  • If a bond has a face value of $100 and pays an annual coupon of $10, what is its yield?

  • 1%
  • 10% (correct)
  • 100%
  • $10
  • What is the term used for the price at which a bond is actually purchased in the market?

  • Face value
  • Bond yield
  • Actual purchase price (correct)
  • Coupon payment
  • What happens to the demand for a bond if the interest rates in the broader economy are lower than the bond's coupon payment?

    <p>Demand for the bond increases</p> Signup and view all the answers

    If the actual purchase price of a bond is higher than its face value, what can be inferred about the bond's coupon payment compared to the prevailing interest rates?

    <p>The coupon payment is higher than the prevailing interest rates</p> Signup and view all the answers

    Which of the following is NOT a feature of debentures?

    <p>Debentures form part of a company's equity capital.</p> Signup and view all the answers

    What is the main purpose of bonds issued by the government or government agencies?

    <p>To raise funds for capital expenditure and infrastructure creation.</p> Signup and view all the answers

    Which of the following statements about convertible debentures is correct?

    <p>They can be converted into shares.</p> Signup and view all the answers

    What is the difference between debentures and bonds in India?

    <p>There is no significant difference, and the terms are often used interchangeably.</p> Signup and view all the answers

    Which of the following is NOT a common type of debenture mentioned in the text?

    <p>Secured Debentures</p> Signup and view all the answers

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